Hey there lovely people!
If you know me personally, you know that I am slightly obsessed with personal finance. And by slightly obsessed, I mean totally obsessed. I admittedly had a strained relationship with my money and credit as I fumbled my way through college and the time after college. I misused and misunderstood it. But after going down a rabbit hole of financial books, podcasts, ebooks, meetings, etc I learned to change my mindset around money and debt, and ultimately help those close to me to do the same. I would send my favorite gal pals all the latest podcasts and articles around personal finance, and sit with them for hours revising budgets and setting up high yield savings accounts. I find it fun!
In the end of 2016 and all of 2017 I made it my mission to slowly climb out of debt and give my savings a major boost. Now this was not an easy task! I would fall off the wagon, hop back on it, then fall off again, and so on, until I found methods that worked for me. By the start of 2018 I cleared all my debts, excluding my student loans, and I have never felt so financially liberated!
Now don’t get me wrong, I was not all of a sudden rolling in the doe and living the good life. It still takes work to stay on budget, on task and grow my financial knowledge. It was time to ramp up my savings and earnings. I had to reevaluate where I was saving my money, why I was saving my money and how I was saving my money. I had to learn how to invest in a way that works for me, how to increase my income, at the whole 9. But I’ll save those posts for another time!
For many people, they have money they can allocate to savings but they just drop it into a traditional bank savings account, and let is grow there. But when you factor in inflation, you are actually loosing money this way. For example, let’s say the annual rate of inflation is 2.5% per year and your savings account promises 0.01% interest on your money. Ummmm, that’s essentially a loss over time!
There are a bunch of online banks that offer competitive savings rate, depending on your type of account, and there are less conventional ways to save. One platform that I came across and excited to use is called CNote.
I would like to state that I am not a financial adviser, or even a guru. I am just passionate about personal finance and want to share what I learn with those who are also interested! In this post I am not giving advice, I am just sharing what I like. Make sure to do your due diligence before signing up for various accounts and consult a professional when necessary.
What is CNote
CNote is a savings platform that invests your money in woman and minority small businesses, as well as under-served communities. CNote should not be confused with a savings account since it is not a bank or a savings account. So how can you save with them? Well CNote lends money to CDFIs (Community Development Financial Institutions) which has a strong record of not losing a single dollar of investor money for over a decade, including in the recession. CDFIs are amazing because they support minority owned businesses, affordable housing, and other groups that may otherwise have difficulty getting money from traditional banks. CNote’s Co-founders Catherine Berman and Yuliya Tarasava use these institutions to give us users up to 2.5% interest rates on our savings funds. (Interested in reading more? Visit their site via my referral link here).
Unlike a bank account, you cannot withdraw your funds at any time. You can withdraw quarterly up to 10% or $20,000 (whichever is larger), which is not a bad idea for a long term savings account. That means only 4 times per year, but CNote does work with you if you need to liquidate suddenly at an unexpected date. For many, this will deter them from dipping into the funds for more trivial purchases and keep their eyes on the prize. Do not use this for savings that will be used to for emergencies or immediate needs. This is strictly to sit and grow, and you can plan withdrawals ahead of time.
What do they promise
CNote promises a low risk and high yield savings and will invest 100% of our money to drive economic development and have a positive social impact. There is no minimum to open an account, and there are no fees.
CNote has what is called a “Triple Protection Plan” which is a 3 layer capitol protection built into your investment account to ensure low risk. The first layer is a general recourse obligation for the CDFIs to CNote. This requires them to pay CNote back even if the borrower cannot repay the loans. The second layer is State and Federal programs in place to protect the money that is invested in CDFIs. CNote only partners with CDFIs who are members of these programs. And the final layer is a loan loss reserve fund as a safety net for peace of mind for the investors. So if for some freak occurrence reason the other 2 layer fall through, CNote has a reserve to cover some of the losses. You can read more about their protection plan HERE.
Also, if CNote the company happens to become abducted by aliens and just vanishes, don’t fret, the CDFIs are still obligated to hold on to your money, as it earns interest, waiting on you to do as you need with the funds. Since CNote is not a bank, they do not hold on to your money.
What do they not promise
As mentioned before, CNote is not a bank savings account. Even though it is low risk, it is not without risk. Every investment has some potential for risk. You cannot truly predict future performance, even if the past has been consistent. Also, CNote is not FDIC or NCUA insured.
The current 2.5% return rate is not fixed so it is subject to change as prime rates change. They can either go up or they can go down. Over time, they will adjust the rates to keep competitive with returns offered at other institutions.
Why I support them
This is a socially responsible alternative to your savings account. I am an advocate for high yield savings because no one should still only be saving in bank savings accounts that promise them 0.1-0.7% interest on their money. There are too many better options out there that are not essentially losing you money over time. I preach this to my friends all. the. time.
I am a minority woman who is working to build a small business and CNote supports people who are just like me. This is important to me because we are one of many groups who have a harder time getting money from banks and investor while still offering the same or more than our white male counterparts. I stand behind institutions and companies that stands behind equality. I also love how they aim to strengthen local communities and undeserved communities. When I invest my money, I want it to more than grow for me, I want it to affect people who need the loans. I feel like I am part of the solution by supporting positive social impact. And on the CNote platform, you can actually see tangible social impact.
These are just a few of the key points I’ve learned about CNote and why I am excited to use their platform. What do you all think of CNote? Is it a platform you can get behind? And would you like me to share more institutions that drive social impact? Let me know your thoughts in the comments below!
With love,
CoCo